Naturgy stands to gain from the intended mechanism as it seeks to manage gas price pressure within the electricity market. A recent Fitch rating agency report frames the Iberian market, noting that the so-called Iberian exception could show a higher load factor for the combined cycle plants, driven by the need to meet rising French demand. The analysis points to Francisco Reynés in assessing how governments are addressing the windfall profits of electricity, gas, and oil companies while potentially increasing the tax burden across the sector within the region.
Overall capacity shows that a major gas company—occupying roughly 30 percent of the 7,400 megawatts total in the park—controls and operates the combined-cycle plants. These installations burn natural gas to produce electricity more efficiently, a claim the company itself highlights on its website. These plants are the only ones receiving compensation to align with the market price of natural gas (Mibgas). Fitch notes that the gas price cap could lift the load factor to secure French demand, contingent on limited interconnection capacity (2.8 percent) between the two nations, and that Naturgy could benefit from this framework. The final impact will hinge on renewable and hydropower generation, demand, and weather conditions during the period the measure remains in place (June 15 to May 31 of the following year).
The interconnection with France, under construction, has a maximum export capacity, and the Iberian exception was activated for the first time since the measure began on June 15. With wholesale electricity in Spain generally cheaper than in France, France tends to source much of its electricity from Spain. The bulk of production that serves this increased demand is expected to come from combined-cycle plants because other technologies may not be sufficient to meet Spanish demand, especially if demand rises sharply. France purchases electricity at auction prices, while congestion rents rise as energy moves across the border; these rents are shared between the two countries and typically flow to the transmission network as income in Spain. The Iberian mechanism can help reduce gas adjustment costs when it operates as intended (Fitch, 2024).
reduced capacity
Interconnection capacity between Spain and France is temporarily reduced. French sources report that one transmission line on the French side is out of service, shrinking the usual average of around 2,900 megawatt-hours to roughly 1,200. This reduction leaves the link between Spain and France weakened, representing about 2.8 percent of the Iberian system’s total capacity. This constraint played a role in the European Commission’s approval of the special treatment and suggests that a larger interconnection with Spain and Portugal could have increased cross-border flow.
The executive’s initial approach to Brussels was to create a dual offer: an hourly auction outside the standard price to France, and a separate sale for Spain and Portugal where gas prices are capped. The aim was to prevent sales to France from pushing above the ceiling while still allowing reduced-price sales locally. This plan did not receive final European approval, limiting cross-border flexibility.
Reduce profit for gas
The Fitch analysis also examines extraordinary benefits earned by electricity companies. Reports from leading Spanish outlets indicate that the government’s September move to raise natural gas prices—and the plan to extend it through the summer—could yield approximately 2 billion euros in revenue in the first three months of the scheme. The mechanism lowers consumer bills but faced exemptions for production sold at fixed prices, a decision that softened the immediate impact.
According to Fitch, most production was contracted in advance to group affiliates or through long-term purchase agreements and financial derivatives. In the scenario of high price pressure, the financial impact was manageable, and companies demonstrated they were not exploiting the system to excess. The agency notes that the pricing environment remains volatile, but the adjustments have been internally absorbed by many firms in the sector (Fitch, 2024).